By Praveen Menon / Reuters
DUBAI: Arabtec has no plans to renew talks with Abu Dhabi state fund Aabar Investments about a taking a stake in the Dubai builder because its funding needs have eased, its chief financial officer said.
Sovereign fund Aabar, which owns stakes in German carmaker Daimler and commodities trader Glencore, scrapped a $1.7 billion deal to buy a 70 percent stake in Arabtec through mandatorily convertible bonds two years ago at the peak of Dubai’s property market collapse.
The Abu Dhabi government-owned fund recently raised its stake in Arabtec, fueling speculation it may be interested in the company once again.
“There is no need to renew these discussions,” Ziad Makhzoumi said in an interview on Sunday.
“There were discussions earlier of them taking a stake in the company … and now they bought a stake publicly. The board has decided that the convertible bond is not required, further funding is not required. So that is not an option anymore.”
Aabar raised its holding in Arabtec to 5.28 percent, making it the largest shareholder in the company.
“We welcome long-term institutional shareholders … that shows confidence in the company and the market,” said Makhzoumi.
Investor interest in Arabtec surged, making it fifth-best performing share on the Dubai bourse this year. The stock has risen 84 percent.
The largest builder in the United Arab Emirates by market value will be hiring thousands of additional workers this year in anticipation of winning more contracts in Saudi Arabia and the UAE.
“We are always eyeing work in Saudi Arabia and we are anticipating more work in the UAE,” said Makhzoumi. “It will be a big hiring move this year, it will be in the thousands.”
Saudi Arabia is on a building spree, as pro-democracy protests in the region prompted King Abdullah to announce social spending programs estimated at around $130 billion. This included building 500,000 new homes at a cost of $67 billion.
The biggest Arab economy is facing a massive housing problem due to rapid population growth and an inflow of expatriate workers.
Arabtec has a joint venture in Saudi Arabia with the Saudi Binladin Group and Prime International Group Services. Of its current backlog of 14 billion dirhams ($3.8 billion), 5.5 billion is in Saudi Arabia.
The company is also eyeing growth in Abu Dhabi this year, where it has bid for a major contract to build a new airport terminal. If it wins the contract, Abu Dhabi would become one of the top markets for Arabtec, Makhzoumi said.
He said the company has also bid for other projects in Abu Dhabi such as hospitals, towers and some additional work with ADNOC. It announced winning three contracts in Abu Dhabi for 256 million dirhams earlier.
In neighboring Dubai, the builder was awarded a $153 million contract for expansion of the Dubai International Airport. Makhzoumi said the firm was bidding for more projects in Dubai, including new projects announced by Nakheel.
Makhzoumi said 2012 will be a better financial year.
“If nothing major happens, then this year will definitely be better than last year. The plan is to keep on growing, getting into markets and projects that are profitable, that require minimum funding from our side, maximize the use of our assets and return highest possible value to the shareholders.”